Coalition for Competitive Electricity v. Zibelman

The federal district court for the Southern District of New York upheld a “zero emission credit” (ZEC) program intended to subsidize old nuclear power plants in upstate New York. The ZEC program is one component of the Clean Energy Standard adopted by the New York Public Service Commission. Plaintiffs challenging the New York program were electric generators and trade groups of electric generators. They unsuccessfully argued that the ZEC program was unconstitutional because it was preempted and violated the dormant Commerce Clause. The court held that it did not have equity jurisdiction over the plaintiffs’ claims that the Federal Power Act (FPA)—which grants FERC exclusive jurisdiction over the interstate wholesale electricity market—preempted the ZEC program. The court concluded that Congress intended to foreclose a private right of action, citing both FPA’s provisions for a detailed remedial scheme before FERC and—more definitively, in the court's view—the Public Utility Regulatory Policies Act’s addition to the FPA of a private cause of action for a narrow scope of challenges to state action. The court did not find that the relief sought by the plaintiffs would require the court to apply “judicially unadministratable” standards, but the court indicated that such a finding was not necessary to bar jurisdiction. The court also held that the FPA preemption claim would, in any event, fail on the merits. The court—looking to the Supreme Court’s 2016 opinion in Hughes v. Talen Energy Marketing, LLC—said the ZEC program did not impermissibly “tether” ZEC payments to participation in the wholesale capacity auctions and did not directly affect wholesale rates. The ZEC programs therefore avoided field preemption. The court also found that the plaintiffs did not state a plausible claim for conflict preemption because the ZEC program did not run afoul of FERC’s goal of efficient energy markets. The court ruled that the plaintiffs did not have a cause of action to bring their dormant Commerce Clause claim because their alleged injuries did not fall within the zone of interests protected by the dormant Commerce Clause—i.e., the economic interests of out-of-state entities. The court also held that the plaintiffs failed to state a dormant Commerce Clause claim because New York State acted as a market participant when it created ZECs.

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The beneficiaries of the ZECs program—owners of nuclear facilities—submitted a reply brief reiterating that the plaintiffs’ preemption and dormant Commerce Clause claims should fail.

The parties to a challenge to New York’s plan to give certain nuclear power plants “zero-emission credits” (ZECs) completed their briefing on the motion to dismiss the challenge. The ZECs program, approved by the New York State Public Service Commission (PSC) in 2016, is intended to serve as “bridge to a 50-percent-renewable energy supply” by 2030. The PSC defendants argued that their action was not preempted because it fell within the field of regulation reserved to the states in the Federal Power Act. They also reasserted that the plaintiffs had no private cause of action for their preemption claim and had failed to state a dormant Commerce Clause Claim.

The ZECs program’s challengers—owners of fossil fuel-fired power plants—argued that the federal district court for the Southern District of New York had equity jurisdiction over their claim that the Federal Power Act preempted the New York Public Service Commission's action. The plaintiffs also asserted that their complaint stated claims that the ZECs program was both field preempted and conflict preempted. The plaintiffs also argued that they had stated a claim of violation of the dormant Commerce Clause.

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The New York Public Service Commission (PSC) moved to dismiss an action challenging the portion of its Clean Energy Standard (CES) that would compensate certain nuclear power facilities at risk of retiring for the “zero-emission generation” they provide. The PSC argued a preemption cause of action was not available to the plaintiffs under the Federal Power Act and that the preemption claims failed as a matter of law because the CES was a “a straightforward exercise of state authority to regulate generation facilities and their environmental impacts.” The PSC said that the dormant Commerce Clause claim also failed as a matter of law because plaintiffs had not shown discrimination against interstate commerce. The owners of the nuclear facilities that would receive payments under the CES plan moved to intervene and moved to dismiss, largely echoing the PSC’s arguments. The environmental organizations Environmental Defense Fund and Natural Resources Defense Council each filed an amicus brief in support of the PSC’s motion to dismiss.

The owners of the nuclear facilities that would receive payments under the CES plan moved to intervene and moved to dismiss, largely echoing the PSC’s arguments.

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